Money Merge Accounts: How Do They Work? (Beyond the Software) Part 3

In my previous posts I have ventured off to show that the latest "fad" is not necessarily all it is cracked up to be.  Money Merge Accounts and other mortgage acceleration programs, while beneficial, may not be the most beneficial and there are some issues with them. 

If you have not already, please read the following:

Money Merge Accounts: How Do They Work? (Beyond the Software) - Part 2
Money Merge Accounts: How Do They Work? (Beyond the Software) - Part 1

In this post, I am going to explain how most Americans fail to realize the impact their decisions make, mostly chasing what some idiotic financial gurus claim is best, such as Suze Orman and David Bach, or even worse, relying on what their "salesman" is telling them.

I would say that most Americans have no real financial plan and they especially do not have a mortgage plan.  Most will go through life not adding even a dime to their mortgage payment for one reason or another and will more than likely spend it frivolously, wasting precious money along the way.  That was Option 1 in my last post by the way.

So, taking each option and carrying them out to the 30 year mark, let's run a comparison.  In the table below, using the same assumptions as before, here are the results...

	Investment Balance (minus mortgage if still owed)
Option 1 (do nothing)	$0
Option 2 (discretionary money in mortgage, then invest)	$1,001,578
Option 3 (invest discretionary income - payoff mortgage over 30 years)	$1,004,515
Option 4 (Use MMA or other HELOC, then invest @ 10.4 yrs)	$973,000
Option 5 (Use CMG for whole amount, then invest)	$917,842
Option 6 (IO loan, invest discretionary plus difference)	$1,005,205
Option 7 (IO loan, invest discretionary, difference, plus tax savings)	$1,255,542

Again, no smoke and mirrors here, simply using the same assumptions UFF uses in their own presentation, including based on a 6% rate of return (verify their number and the number inputted in Option 4 and you will see the same for a 6% rate of return on investments).

So, the Money Merge Account actually falls behind even the homeowner that simply pays down the mortgage on his own.  This is just according to this example and your particular situation may not result similarly, but you need to ensure you look at ALL options. 

Now, since investing allows for the opportunity to gain even more, let's look at the Options 1 thru 7 with greater rates of return, say 8% and 10% (that is what UFF used), alongside the 6% results and see the difference...

	6%	8%	10%
Option 1	$0	$0	$0
Option 2	$1,001,578	$1,273,803	$1,638,022
Option 3	$1,004,515	$1,490,359	$2,260,488
Option 4 (MMA)	$973,000	$1,231,000	$1,575,000
Option 5 (CMG)	$917,842	$1,150,901	$1,457,745
Option 6	$1,005,205	$1,586,941	$2,510,325
Option 7	$1,255,542	$1,959,531	$3,075,447

Again, no smoke and mirrors, using the same numbers from the UFF presentation and assumptions they used. 6% is a good, conservative number, while 10% may add too much risk for you. 

Again, that depends on your unique situation and so you need to seek a truly qualified professional (or professionals) to help you make the right choice for you.  But it should be clear that, while beneficial, Money Merge Accounts and other mortgage acceleration programs are likely not the best for you.

The other point this should drive home is the fact that that, due to the time value of money, the more money invested now will generate more money in the end.  Translation, the more money you send to the banker to pay off your mortgage robs you of more money for your own financial goals.

The next post will break down how the Money Merge Account works, with and without the software.  It will also talk about the CMG Home Ownership Accelerator the way they want you to use it, then will give options how you can save money using a spin off of what you learned.